Freezing Orders

Freezing orders (also known as asset preservation or Mareva orders) are made by the Supreme Court to preserve the assets of a person.

The Court will make the orders to ensure the person does not have the opportunity to hide, distribute or spend assets suggested to have been illegitimately obtained (either directly or indirectly).

The order can be sought by:

The party claiming to be the victim

The Australian Securities and Investment Commission (ASIC)

A Crime Commission

HOW ARE THE ORDERS OBTAINED?

Usually, the party seeking the orders will approach the Supreme Court ex parte (, on their own and without giving notice to person whose assets are to be frozen). They will need to provide information about why they believe the assets should be frozen, usually by way of an affidavit sworn by a person with knowledge of the relevant matters.

If the orders are granted, then the assets of the person are frozen. The party seeking the orders will serve copies of the orders on banks to ensure that the person is not able to access their accounts. This will mean that no withdrawals can be made from any account, and credit cards will not be able to be used.

The orders will also need to be served on that person. The matter will usually be listed in court a few days later, at which time application can be made to amend the orders.

WHAT ASSETS ARE USUALLY FROZEN?

Usually all of a person’s assets are frozen. This includes:

Bank accounts;

Term deposits;

Share portfolios;

Real property;

Valuables;

Motor vehicles.

These assets cannot be sold, mortgaged, leased or otherwise dealt with unless the orders specifically allow for it.

The orders are not limited to assets located or held in Australia.

Freezing orders are also capable of freezing the assets of someone other than the person who is alleged to have illegitimately obtained then. For example, the orders can freeze the assets of a person’s spouse, if it is alleged that the person has stolen to money to buy the assets.

WHAT CAN I SPEND WHEN MY ASSETS ARE FROZEN?

Freezing orders will, at a minimum, allow a person to pay for reasonable living expenses. This is usually a set amount per week, meaning that person can withdraw a certain amount from their account each week to pay for things like groceries and loan repayments.

If the amount allowed in the first set of orders is insufficient, the amount can often be negotiated, or an application can be made to the court to increase the amount.

The orders may, but not necessarily, also allow for reasonable legal expenses, or sometimes legal expenses up to a certain cap. If the person owns or runs a business, the orders will usually allow for costs incurred in the ordinary and proper course of that person’s business.

It is possible to negotiate other exceptions to the orders, although it will necessary to provide documentary evidence as to why the exception is necessary.

If agreement cannot be reached with the other party, an application can be brought to the Supreme Court asking that the orders be varied.

HOW LONG DOES A FREEZING ORDER NEED TO REMAIN IN FORCE?

The freezing orders will always have an expiry date. When the orders are first served, the expiry date will usually be only a few days away. As each date approached, the party seeking the orders can request that they be extended.

Unless the person subject to the order can convince the court that the orders are inappropriate and should not be continued, the orders will usually be continued until such time as the legal dispute is finalised. This usually occurs when the legal proceedings are finalised by the court, or if a settlement is reached and the court approves it.

In some cases, freezing orders can remain in place for several years before any resolution is reached.

AFFIDAVIT OF ASSETS:

The person against whom the orders are sought will usually need to provide an affidavit of assets that sets out all assets held by that person.

This is a complicated document that is used by the party seeking the orders to ensure that they are able to notify all of the organisations that need to be notified.

Parties seeking freezing orders will usually as a matter of course notify the major banks, but will not necessarily know that the person has a bank account with a building society, a share portfolio held through a broker, or a large amount in a betting account.

It is crucial that all assets are specified in the affidavit as severe penalties (up to and including imprisonment) can follow for swearing a false affidavit.

CAN I FIGHT THE FREEZING ORDERS?

Yes. However, the court will, generally speaking, only lift freezing orders against a person (in part or in full) if one of the following can be proved:

That the person is capable of paying the entire amount alleged to have been taken;

That the claim against the person is not strong enough to justify the orders;

That the party that sought the orders did not make full and frank disclosure to the court.

The freezing orders will also be lifted if the proceedings can be settled.

DO FREEZING ORDERS MEAN I WILL BE PROSECUTED?

Not necessarily.

In some cases, the evidence is strong enough for freezing orders and even civil judgment, but not strong enough for criminal charges. Sometimes freezing can be obtained despite the fact that no criminal conduct is alleged.

However, the prospect of criminal charges is always a factor that needs to be carefully managed. The right to silence is not a right that should be sacrificed lightly, but a time may come in proceedings where it is impossible to defend civil proceedings without sacrificing that right.

It is essential that you are represented by lawyers with experience dealing with both large complex prosecutions and freezing orders if your rights are to be properly protected.

where to next?

If you suspect that you may be under investigation, or if you have been charged with an offence, it is vital to get competent legal advice as early as possible. Our lawyers are highly specialised in criminal law and will be able to guide you through the process while dealing with the various authorities related to your matter.